LUT for GST Furnish LUT in GST, to Sell without Payment of IGST
LUT in GST stands for Letter of Undertaking. It is a document that exporters can file to carry out exports without payment of IGST. Earlier, exporters had to pay IGST on exports and then claim a refund of the same. This caused cash flow problems for exporters as the refund process was time-consuming. To address this issue, the government introduced LUT in GST. Apply for Letter of Undertaking for GST
File LUT in GST @ Rs 1999/-
What Is LUT And Why Is It Used?
All registered taxpayers who export the goods or services will have to furnish Letter of Undertaking (LUT) in GST RFD-11 form on the GST portal in order to make exports without payment of IGST.
Any person can apply for LUT if they:
- Intended to supply goods or services to India or Overseas or to SEZs
- Are registered under GST
- Wish to supply goods or services without payment of an integrated tax
Validity of LUT (Letter of Undertaking)
An LUT remains valid for current financial year from the date of its submission. Example- If LUT was furnished in FY 2022-2023, then the date of expiry of the validity of such LUT is 31st March 2023. Therefore, you need to file fresh LUT for FY 2023-2024.
If the goods for export are not exported within three months of Date of Invoice issue, then the Exporter is liable to pay GST along with 18% interest within 15 days according to Section 50 (1). Also in case of payment for services are not received within one year for which the LUT has been submitted, the exporter is liable to pay GST @ 18% within 15 days. Failing to do so will lead to withdrawal of LUT facility and on subsequent payments, it can again be restored.
What are the benefits of LUT in GST?
There are several benefits of availing LUT in GST. Some of them are:
- Cash Flow: With LUT in GST, exporters can carry out exports without payment of IGST. This means that they do not have to block their working capital in paying IGST and waiting for its refund. This improves their cash flow and helps them to invest the same in their business.
- Time-Saving: Earlier, exporters had to pay IGST on exports and then claim a refund of the same. This process was time-consuming and caused delays in the cash flow. With LUT in GST, exporters can carry out exports without payment of IGST, thereby saving time and increasing efficiency.
- Competitive Advantage: LUT in GST provides a competitive advantage to exporters. It helps them to reduce their transaction costs and offer competitive prices to their customers. This makes them more competitive in the global market.
Documents Required for LUT Filing under GST ?
- Copy of GST registration.
- Pan Card of the entity.
- KYC of authorised person/signatory.
- Cancel Cheque of Entity
- KYC documents of two witnesses
- Nature of employment of witnesses
- Copy of last year LUT (if any).
Important Point To Remember for filing of LUT
- An LUT remains valid for current financial year from the date of its submission. Example- If LUT was furnished in FY 2021-2022, then the date of expiry of the validity of such LUT is 31st March 2022. Therefore, you need to file fresh LUT for FY 2022-2023.
- NO bank guarantee required in case of letter of undertakin.
- The LUT must be duly applied and signed by the authorised signatory of the company, firm, etc.